May, 25, 2017
Improving credit delivery in India
19 Jan
2017
Posted by Poornima Kavlekar

Ribbit Capital and Omidyar Network funded ZestMoney is a technology company that facilitates EMI payment option for products purchased online or offline through its partner merchants without the need for a credit card.

Instant digital lending. That’s the buzzword that keeps Lizzie Chapman, co-founder of Zest Money, on her toes.  “There is a huge percentage of  the population in India that doesn’t have access to credit, as it is impossible to score credit worthiness using traditional methods,” says Chapman. And this thought brought together Chapman, Priya Sharma and Ashish Anantharaman to set up Zest Money in 2015 in Bengaluru. The company aims to use technology and data science to improve the way credit is delivered in India.


“If you need massive digital adoption, there has to be a quick repayment method  in the digital context.”


Solving the real financial problem

“We believe that there is a gap in the transactional credit side,” opines Chapman. Explaining this further, she says, “Traditional credit bureaus are reassessing the credit worthiness of the same people. In fact, traditional financial services companies do not have the expertise, technology, time and alternative ways of assessing credit worthiness of the mid-market consumer.” This effectively means there is an opportunity for fintech companies to understand the specific behaviour of this segment, especially those who don’t have employment history or are self-employed etc. Banks find it almost impossible to lend to this segment, Zest Money believes that using technology one can create models and project the credit worthiness of this population.  Effectively, it aids lending decisions based on alternative data sources, enabling lenders to reach a wider market, as well as make decisions quicker and without manual underwriting.

Not just this, the CEO of ZestMoney believes that credit cards do not really exist in India in the way it does in the rest of the world. It is used to get loyalty points and not really a financing solution. And so, targeting those who really need the financing solution, the company has created an equivalent to the EMI concept available in the offline world.  And so, the company partners with e-commerce companies to create a check out solution for the merchants. Hence, it facilitates EMI payment options for products purchased online or offline with its partner merchants without the need for credit card. It works with over 12 merchants including velvetcase.com, juspay, credr.com, chillr and Zefo.

Challenges galore

Consumer education is one of the most prominent challenges that the company is facing in the industry.  “Customers don’t understand a lot of concepts that we talk about and hence, user adoption is difficult. We have to spend time and money in communicating with them so that they understand us,” says Chapman. The company also has to work on simplifying its message to its customers.

What ZestMoney has to permanently watch out for is the identity of a person and how it can map it to the entire digital footprint of that individual. “It is possible for people to have multiple identities in the online context. This means that our identity connect solution has to track this while working with a customer,” says she.

Path ahead

The pace of change over the last five years  in the fintech space has been very dramatic and the growth going forward is expected to be even more magnificent.  “More specifically, the Indian ecosystem is fully backed by Government initiatives.  KYC is being approached and built with full support from the Ministry of Finance and the RBI,” adds Chapman.  Given her global experience, Chapman believes that the Indian market is advanced when compared to the rest of the world. “For example, the platform behind IMPS and UPI does not exist anywhere else in the world. And there is no other country that has 24/7 real time, instant and low cost payment infrastructure this sophisticated,” adds she, explaining why India has the most conducive environment to create financial products.  This, combined with user population that is advancing at a fast pace, is adding to the strong potential for fintech sector in India.

While the company is all set to capitalise on this potential, it doesn’t believe in aggressive marketing effort and targets consumer education. It also works with its partners to help them target their product to the right consumer and believes that partnership led approach to marketing is sustainable in the long run.

To aid its growth and expansion, the company raised funds to the tune US $ 1.7 million from Ribbit Capital (a US-based VC firm which invests in global fintech) and Mumbai-based Omidyar Network. Currently, the company is raising a fresh round of funds.

“Going forward, with a sharp focus on the digital online transactional credit space, we aim to create new channels and will be led by our customers,” says Chapman. “We aim to use data and technology to create specific financial products and for the next few years, as the market has a lot of demand, we are focussing on the Indian market,” adds she, on a concluding note.


Snapshot

Founders: Lizzie Chapman, Priya Sharma and Ashish Anantharaman

Year:2015

Concept: It is a technology company that gives instant EMIs to online customers, thereby enabling shoppers with no credit card history to shop as much as they want.

Investors: Raised US $ 1.7 million from Ribbit Capital (a US-based VC firm which invests in global fintech companies) and Mumbai-based Omidyar Network.

Comments
No comments for the article
Editor's Pick
  • The Snapdeal Pivot

    In January 2013, Snapdeal had a mere US $100,000 in the bank, a small chunk left after it had burned through almost all of the US $57 million it had raised since September 2009. Th...

  • Transformation by design

    Polaris’ Arun Jain has engineered a unique strategy at the mid-sized financial technology company, incubating a robust products company from within a running services entity. He ...

  • In coffee, we trust

    Tata Starbucks is the coming together of two iconic brands. 34-year-old Avani Saglani Davda, the company’s CEO, explains to us why her game plan for Starbucks in India is to “g...

  • Where there’s traction, Money will follow

    Deepinder Goyal, founder and CEO, Zomato, shares a great working relationship with investor Sanjeev Bikhchandani of Info Edge for one simple reason: Bikhchandani is more entreprene...

  • Playing 20 Questions with Mittu Chandilya

    The AirAsia India boss discusses his interview experience with Tony Fernandes, his firm-and-fair management style and why it is crucial to be a serial innovator to win in the aviat...

  • Where ownership and management are different

    Dr. Ranjan Pai, Managing Director, Manipal Education and Medical Group, has led the professionalisation of the Group by consciously empowering his senior managers, seeding several ...

  • Building a Happy Company

    Ashok Soota-led Happiest Minds Technologies has woven happiness into its business process. Find out how you can do it too....

  • Narayana Health’s ten-year plan

    Narayana Health’s Dr. Devi Prasad Shetty wants to rewrite India’s healthcare story. His personal mantra: it is pointless talking about all the advancements in healthcare if peo...

  • Creative Dialogue on Scaling Up

    Cognizant’s Lakshmi Narayanan indulges in a creative, freewheeling chat with L. Kannan and Vijay Babu of Vortex Engineering, a solar-ATM manufacturer....

  • "Businesses don’t go anywhere, people do"

    Mindtree’s Subroto Bagchi urges entrepreneurs to think of their journey as a process of continuously creating infrastructure – physical, intellectual and emotional. He specific...